Yen steady amid BoJ hike bets, US jobs data in focus
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The Japanese Yen (JPY) holds its ground near the 150.00 mark against the US Dollar (USD), benefiting from a softer risk tone and trade war fears. The market focus shifts to the US Nonfarm Payrolls (NFP) report, which could provide fresh direction for the USD/JPY pair, as traders weigh the potential for additional Bank of Japan (BoJ) rate hikes against the Federal Reserve's dovish outlook.
Market Drivers
Bank of Japan’s Hawkish Stance The BoJ's signaling of additional rate hikes continues to support the JPY. BoJ Governor Kazuo Ueda recently emphasized that economic data aligns with the central bank's tightening trajectory. However, policymakers like Toyoaki Nakamura urge caution, reflecting internal debates on the pace of future hikes. Geopolitical and Trade War Concerns Persistent geopolitical risks, including heightened Russia-Ukraine tensions and US President Donald Trump's tariff threats, underpin safe-haven demand for the Yen. Trump's policies are raising fears of a second wave of global trade wars, further dampening risk sentiment.
US Federal Reserve Outlook Markets remain divided over the Fed's next move. With the CME Group's FedWatch Tool pricing a 70% probability of a 25-basis-point rate cut in December, the USD lacks clear bullish momentum. Thursday’s Initial Jobless Claims data, showing a modest rise to 224K, reinforced expectations for cautious Fed policy.
US Treasury Yields The benchmark 10-year US Treasury yield remains near six-week lows, lending support to the lower-yielding JPY. Despite this, the USD/JPY pair finds stability due to a modest recovery in the US Dollar.
Technical Analysis: USD/JPY
Key Levels to Watch
Support
148.65: Overnight swing low
148.80: 100-day Simple Moving Average (SMA), pivotal support
148.00: Psychological level and immediate target for bears
147.35-147.30: Further downside zone
147.00: Round figure and critical support
Resistance
150.55: Initial upside barrier
150.70: Secondary resistance
151.20-151.25: Weekly high touched on Wednesday
152.00: Key hurdle near the 200-day SMA
Outlook The USD/JPY pair is poised for a decisive move based on the outcome of the NFP report. A break below the 100-day SMA could validate bearish momentum, targeting the 147.00 region. Conversely, sustained buying above the 151.20 level would indicate the corrective decline has ended, potentially paving the way for a test of the 152.00 mark and beyond.
NFP Report: Critical Catalyst Ahead
The US NFP report will shape expectations for Fed policy, influencing the USD's trajectory. Economists forecast an addition of 200K jobs in November, with the unemployment rate expected to tick up to 4.2%. A stronger-than-expected report could challenge JPY bulls, while disappointing data would reinforce bearish momentum for USD/JPY.
Investor Strategy:
Bulls: Watch for a break above 151.25 for momentum trades toward 152.00.
Bears: A decisive move below 148.80 could validate a deeper correction targeting 147.00.
The outcome of the NFP report and subsequent Fed guidance will be pivotal in determining the pair's near-term direction.
Market Drivers
Bank of Japan’s Hawkish Stance The BoJ's signaling of additional rate hikes continues to support the JPY. BoJ Governor Kazuo Ueda recently emphasized that economic data aligns with the central bank's tightening trajectory. However, policymakers like Toyoaki Nakamura urge caution, reflecting internal debates on the pace of future hikes. Geopolitical and Trade War Concerns Persistent geopolitical risks, including heightened Russia-Ukraine tensions and US President Donald Trump's tariff threats, underpin safe-haven demand for the Yen. Trump's policies are raising fears of a second wave of global trade wars, further dampening risk sentiment.
US Federal Reserve Outlook Markets remain divided over the Fed's next move. With the CME Group's FedWatch Tool pricing a 70% probability of a 25-basis-point rate cut in December, the USD lacks clear bullish momentum. Thursday’s Initial Jobless Claims data, showing a modest rise to 224K, reinforced expectations for cautious Fed policy.
US Treasury Yields The benchmark 10-year US Treasury yield remains near six-week lows, lending support to the lower-yielding JPY. Despite this, the USD/JPY pair finds stability due to a modest recovery in the US Dollar.
Technical Analysis: USD/JPY
Key Levels to Watch
Support
148.65: Overnight swing low
148.80: 100-day Simple Moving Average (SMA), pivotal support
148.00: Psychological level and immediate target for bears
147.35-147.30: Further downside zone
147.00: Round figure and critical support
Resistance
150.55: Initial upside barrier
150.70: Secondary resistance
151.20-151.25: Weekly high touched on Wednesday
152.00: Key hurdle near the 200-day SMA
Outlook The USD/JPY pair is poised for a decisive move based on the outcome of the NFP report. A break below the 100-day SMA could validate bearish momentum, targeting the 147.00 region. Conversely, sustained buying above the 151.20 level would indicate the corrective decline has ended, potentially paving the way for a test of the 152.00 mark and beyond.
NFP Report: Critical Catalyst Ahead
The US NFP report will shape expectations for Fed policy, influencing the USD's trajectory. Economists forecast an addition of 200K jobs in November, with the unemployment rate expected to tick up to 4.2%. A stronger-than-expected report could challenge JPY bulls, while disappointing data would reinforce bearish momentum for USD/JPY.
Investor Strategy:
Bulls: Watch for a break above 151.25 for momentum trades toward 152.00.
Bears: A decisive move below 148.80 could validate a deeper correction targeting 147.00.
The outcome of the NFP report and subsequent Fed guidance will be pivotal in determining the pair's near-term direction.